System and method for ETF investing

ABSTRACT

A system and method for ETF investing that provides a primary exchange traded fund (PETF) that comprises a plurality of shares, wherein the primary exchange traded fund comprises investments in a plurality of secondary exchange traded funds (SETF). The system and method enable intraday, or other periodic, trading of a variable number and type of ETFs through a single ETF, based on one or more categories and factors including, but not limited to, real-time NAVs.

CROSS-REFERENCE

This application claims priority of U.S. patent application Ser. No.60/700,684 filed on Jul. 19, 2005.

FIELD OF THE INVENTION

This invention relates to a system and method for investing throughexchange-traded funds (ETFs) and more specifically, in the preferredembodiment of the system and method, to investing through ETFs thatcomprises a plurality of other ETFs.

BACKGROUND OF THE INVENTION

An ETF is an investing tool that is similar to stocks, except that theshares of a given ETF represent an index of stocks, other securities orother investments rather than a single company stock. Similar to mutualfunds, ETFs provide an investor with various types of diversity within asingle fund. However, ETFs provide the added benefit of lower expenses,greater transparency, better tax efficiency, and flexibility. Forexample, unlike mutual or index funds, whose shares may only be boughtat the end of the day based on that day's closing price or net assetvalue as of 4:00 pm on any given day, ETF shares may be purchasedintraday, at any time during the trading day, in the same way stocks aretraded. Examples of ETFs are the Standard & Poor's Depository Receipt(SPDR), otherwise known as spider, that trades as a stock on theAmerican Stock Exchange and is an index of, or otherwise represents, theS & P 500; Diamonds (DIA) that trades as a stock on the American StockExchange and is an index of, or otherwise represents, the thirty stocksin the Dow Jones Industrial Average; Cubes (QQQQ) that trades as a stockon the NASDAQ and is an index of, or otherwise represents, the NASDAQ100. However, such ETFs are self-limiting because they are based on theETF sponsor's previously selected index that, once selected and approvedby the SEC, is thereafter limited to that selected index. Current ETFsare not flexible or responsive enough to investors who seek tocapitalize on more sudden movements in the market.

SUMMARY OF THE INVENTION

It is therefore a primary object of the invention to provide a systemand method for providing ETFs that comprise shares from other ETFs.

It is a further object of the invention to provide a means through whichinvestors may capitalize on sudden movements in the marketplace.

A preferred method of investing of the invention generally comprises thesteps of: providing a primary exchange traded fund (PETF) comprising aplurality of shares, wherein the primary exchange traded fund comprisesinvestments in a plurality of secondary exchange traded funds (SETF);and offering one or more of the shares for sale. The method may furthercomprise the step of, selling one or more of the shares to one or morequalified buyers, wherein the step of selling may comprise selling oneor more of the shares intraday at an intraday share price.

The plurality of SETFs each preferably has a net asset value (NAV)wherein the PETF comprises a plurality of SETFs determined by a definedcategory of predetermined ETFs, and wherein each of the predeterminedETFs preferably has an NAV predetermined and ranked based on theirrespective NAVs. The category of ETFs may be defined as ETFs having anNAV that is within a top tier of the predetermined ETFs based on theranking, wherein the predetermined ETFs are ranked from highest tolowest NAV and the top tier comprises the 40 or fewer highest rankedpredetermined ETFs. In contrast, the predetermined ETFs may also beranked from highest to lowest NAV and wherein the top tier comprises the40 or fewer lowest ranked predetermined ETFs. The category of the methodmay be defined by one or more factors selected from a group consistingof NAV, sector, capitalization, geography, asset quality, whether an ETFis indexed or closed end, rating, security type, class, equity type,index type, number and trading trend, wherein the NAV may be calculatedbased on a temporal period selected from a group consisting of seconds,hours, daily, weekly, monthly, quarterly, and annually.

The step of providing in the method of the invention may furthercomprise the step of resetting the plurality of SETFs based on one ormore factors selected from a group consisting of NAV, sector,capitalization, geography, asset quality, whether an ETF is indexed orclosed end, rating, security type, class, equity type, index type,number and trading trend, and still further, or alternatively, maycomprise the step of resetting the plurality of SETFs based on one ormore temporal periods selected from a group consisting of seconds,hours, daily, weekly, monthly, quarterly, and annually.

The preferred embodiment of the system of the invention for ETFinvesting generally comprises: means for providing a primary exchangetraded fund (PETF) comprising a plurality of shares, wherein the primaryexchange traded fund comprises investments in a plurality of secondaryexchange traded funds (SETF); and means for offering one or more of theshares for sale. The system may further comprise means for selling oneor more of the shares to one or more qualified buyers, a means forselling intraday, and/or means for selling the shares at an intradayshare price.

The plurality of the SETFs used in the preferred embodiment of thesystem of the invention may each have a net asset value (NAV), whereinthe PETF comprises a plurality of SETFs determined by a defined categoryof predetermined ETFs, wherein each of the predetermined ETFs may havean NAV predetermined and ranked based on their respective NAVs. Thecategory of ETFs of the system may be defined as ETFs having an NAV thatis within a top tier of the category of ETFs based on the ranking,wherein the predetermined ETFs are ranked from highest to lowest NAV andthe top tier comprises the 40 or fewer highest ranked predetermined ETFsor the top tier comprises the 40 or fewer lowest ranked predeterminedETFs.

The PETFs of the system may comprise a plurality of SETFs determined bya defined category of predetermined ETFs, wherein the category isdefined by one or more factors selected from a group consisting of NAV,sector, capitalization, geography, asset quality, whether an ETF isindexed or closed end, rating, security type, class, equity type, indextype, number and trading trend, wherein the NAV may be calculatedintraday, and wherein the NAV is calculated based on a temporal periodselected from a group consisting of seconds, hours, daily, weekly,monthly, quarterly, and annually.

The system of the invention may further comprise, means for resettingthe plurality of SETFs based on one or more factors selected from agroup consisting of NAV, sector, capitalization, geography, assetquality, whether an ETF is indexed or closed end, rating, security type,class, equity type, index type, number and trading trend. Still further,the system may comprise, means for resetting the plurality of SETFsbased on one or more temporal periods selected from a group consistingof seconds, hours, daily, weekly, monthly, quarterly, and annually.

BRIEF DESCRIPTION OF THE DRAWINGS

Other objects, features and advantages of invention will occur to thoseskilled in the art from the following description of the preferredembodiments and the accompanying drawing in which:

FIG. 1 is a schematic diagram of a preferred embodiment of the systemand method of the invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS AND METHODS

The invention features a system and method that provides investors witha means for investing in a plurality of ETFs through a single ETF. Aschematic diagram of a preferred embodiment of the investing system ofthe invention is shown in FIG. 1. The preferred embodiment, shown inFIG. 1, is an ETF made up of shares from other ETFs and is generallyreferred to herein as ETF 10. The preferred embodiment of the inventionis a real-time ETF preferably based, at least in part, on real-timeNAVs. Although the embodiment shown in FIG. 1 is directed at the topforty ETFs otherwise referred to as gainers, based on their respectiveNAVs, the system and method of the invention may comprise and becategorized by a virtually unlimited number, type and combination ofETFs. The system and method of the invention provides an ETF that can betraded intraday that is comprised of shares of other ETFs that,likewise, can be traded intraday. As such, ETF 10 enables an investor tocapitalize on sudden movements in the marketplace as defined by the ETFsthat make up ETF 10.

The embodiment, shown and referred to as ETF 10, comprises a pluralityof other ETFs. ETF 10 is made up of the top forty ETFs having thehighest NAV (gainers). More specifically, for example, the actual fortyETFs making up ETF 10 are the forty ETFs having the highest NAVs at anygiven point intraday. The ETF of the invention is not limited tointraday. For illustration, the point at which the top forty, forexample, are determined can be calculated, and/or reset, based on anytemporal definition including but not limited to intraday for any timeperiod (from seconds to hours), daily, weekly, monthly, quarterly,and/or annually. As such, the ETFs making up ETF 10 would likely changeover the course of a given trading day, or whatever the set period, asthe NAVs of all the ETFs change over the course of the trading day orset period. For example, ETFs can be traded at least every thirtyseconds which means that the actual ETFs making up ETF 10 couldconceivably change at least every thirty seconds. Some of the exchangescan calculate changes even faster or more frequently. The speed at whichthe actual ETFs making up ETF 10 may change is only limited to theextent that the exchange on which the underlying ETFs are traded is ableto calculate the NAV of the underlying ETFs. As such, an investor of ETF10 or any other ETF of the invention, could rapidly respond to a suddenshift in the overall marketplace or a particular market by investing ordivesting shares of the ETF of the invention at a moment's notice. Forillustration only, one or more embodiments of the ETF of the inventionmay be defined as follows: (Top 5/10/25/50/up NAVs)+(subscriptions+orredemptions−)=new real-time NAV.

The system and method of the invention preferably utilizes the computerprogram of the invention to automatically manage ETF 10 electronically.The program for a given ETF of the invention is defined by preset rules,which, in the case of ETF 10, would be based on the NAV for all ETFs.The system would then buy and sell other ETF shares as frequently asdesired or otherwise at minute time intervals based on their respectiveNAVs for a given momentary time interval as determined by thecalculation speed of the given exchange.

As noted, the system and method of the invention is not limited to thetop forty ETFs or any other type of top tier designation such asgainers. Investors just as frequently may want to investors in thebottom forty ETFs or bottom tier ETFs, otherwise referred to as losers.The essential aspects of the system and method of the invention is toprovide an ETF that can be traded intraday and is made up of a pluralityof other ETFs. The number and type of ETFs selected or defining an ETFof the invention is virtually limitless and likely would depend on anyrestrictions or minimum numbers set by the SEC or other regulatoryinstitution. Typically, ETFs and other traded funds are defined bymarket, class, region, equity and/or security type. Below is anillustrative, but in no way limiting, list of other possible ETFs of theinvention:

-   1. An ETF that comprises the bottom forty (40) ETFs based on NAV.-   2. An ETF that comprises the top ten ETFs in the real estate sector.-   3. An ETF that comprises the bottom ten ETFs in the real estate    sector.-   4. An ETF that comprises the top twenty indexed ETFs.-   5. An ETF that comprises the top twenty closed-end ETFs.

Any one of these ETFs can be further or alternatively structured basedon any number of sector relevant variables such as capitalization,geographic region, and/or asset quality. The variables and combinationsare virtually limitless.

According to Thomson Financial Services, there are hundreds of ETFs,both indexed and closed-end funds, currently available in themarketplace. Each of these ETFs represents a diversified mix of shareswhich themselves are unique products in the public markets. Each ofthese ETFs invests in one specific type or specialized sector of a givenindustry or market. The ETF of the invention could likewise comprise thetop percentage of ETFs in a specific industry or market or could, incontrast, comprise ETFs from diverse industries or markets. For example,ETF 10 is based on the top forty ETFs based on NAV alone, without regardto industry or market.

As noted, the system and method of the invention provides the tradingcharacteristics of an ETF but adds additional layers of ETFs. The ETF ofthe invention provides the substantial benefit of enabling investors toinstantly respond to sudden changes in the overall market or in aspecific market or segment depending on whether another ETF is tradingin that given market or segment. The system and method also contemplatesan ETF made up of shares from a plurality of other ETFs as well asshares from stocks and/or bonds, depending on the definition, goals, orphilosophy of a given ETF. In such an embodiment, the ETF of theinvention could in part be electronically managed and in part bepersonally managed by a portfolio manager. The ETF portion could bemanaged electronically and the equity/security portion could be managedpersonally by a portfolio manager.

The system and method of the invention can be restructured and/orapplied to all types of ETFs. For example, offerings using the inventioncan be structured as any number of closed-end funds or indexes for anyand all types of markets, sectors and even more specifically to one ormore types of groupings within a given sector. As noted, the onlylimitations are any rules set by a regulatory authority such as the SEC.The variables are innumerable and can be structured based on marketdemand. Depending on the structure or strategy desired, SEC requirementsrelating, for example, to the number of ETFs in a larger pool of ETFswould need to be followed.

The system of the invention can be structured for trading on any of theavailable exchanges or on an entirely new exchange formed in view of thenew market capabilities of the invention. Depending on the exchange ofchoice, once the SEC or other jurisdictional authority approves a givenETF of the invention, the system can be run and managed through anymeans, acceptable to the regulatory authorities, for trading securities.The method of the invention for offering an improved ETF generallycomprises the steps of: providing a primary exchange traded fundcomprising a plurality of shares based on a plurality of secondaryexchange traded funds; offering the shares for sale, and selling one ormore of the shares to one or more qualified buyers. The step of sellingmay comprise selling the shares at any time intraday or at any otherdefined temporal point. The primary exchange traded fund preferablycomprises, but is not limited to, investments in secondary exchangetraded funds defined as the top tier of exchange traded funds based ontheir NAV. The exchange traded fund may further comprise a plurality ofshare classes whereby the step of selling may further comprise selling aplurality of shares specific to one or more of the share classes.

Although specific features of the invention are shown in some drawingsand not others, this is for convenience only as some feature may becombined with any or all of the other features in accordance with theinvention.

Other embodiments will occur to those skilled in the art and are withinthe following claims:

What is claimed is:
 1. A computer-implemented method of providinginvestment in a number of pre-existing exchange traded funds (ETFs)through a single ETF, comprising the steps of: a) providing anautomatically-managed primary exchange traded fund (PETF) having aplurality of PETF shares that are traded intraday, wherein the PETF hasan intraday net asset value (NAV), and consists of shares of a pluralityof pre-existing ETFs that are designated as secondary exchange tradedfunds (SETF), each SETF having a NAV that is determined intraday, andeach SETF having a plurality of SETF shares that can be traded intraday;b) automatically selecting, according to preset rules, the SETFs in thePETF based on a defined category or pre-existing ETFs; c) using aprogrammed computer to make intraday purchases and sales of shares ofthe selected SETFs; d) using a programmed computer to calculate areal-time intraday NAV of the PETF the calculation made according to aformula that is based on the real-time intraday NAVs of all of theselected SETFs; and e) selling PETF shares intraday at the calculatedreal-time NAV of the PETF.
 2. The method of claim 1, wherein each ofsaid pre-existing ETFs has an intraday NAV, and the pre-existing ETFsare ranked based on their respective intraday NAVs.
 3. The method ofclaim 2, wherein said defined category of pre-existing ETFs is definedas ETFs having an intraday NAV that is within a top tier of saidpre-existing ETFs based on said ranking.
 4. The method of claim 3,wherein said pre-existing ETFs are ranked from highest to lowestintraday NAV and said top tier comprises the 40 or fewer highest rankedpre-existing ETFs.
 5. The method of claim 3, wherein said pre-existingETFs are ranked from highest to lowest intraday NAV and said top tiercomprises the 40 or fewer lowest ranked pre-existing ETFs.
 6. The methodof claim 1, wherein said defined category is defined by one or morefactors selected from a group consisting of intraday NAV, sector,capitalization, geography, asset quality, whether an ETF is indexed orclosed end, rating, security type, class, equity type, index type, andtrading trend.
 7. The method of claim 1, wherein the selection of theSETFs in the PETF is made based on the intraday NAVs of saidpre-existing ETFs.
 8. The method of claim 1 wherein shares of the SETFsare purchased and sold at sub-minute intervals.
 9. The method of claim 1wherein the selection of the SETFs in the PETF takes place intraday. 10.A computer-implemented method of providing investment in a number ofpre-existing exchange traded funds (ETFs) through a single ETF,comprising the steps of: a) providing an automatically-managed primaryexchange traded fund (PETF) having a plurality of PETF shares that aretraded intraday, wherein the PETF has an intraday net asset value (NAV),and consists of shares of a plurality of pre-existing ETFs that aredesignated as secondary exchange traded funds (SETF), each SETF havingan NAV that is determined intraday, and each SETF having a plurality ofSETF shares that can be traded intraday; b) using a programmed computerto automatically select, according to preset rules, the SETFs in thePETF based on the NAVs of pre-existing ETFs; c) using a programmedcomputer to make intraday purchases and sales of shares of the selectedSETFs; d) using a programmed computer to calculate the real-timeintraday NAV of the PETF, the calculation made according to a formulathat is based on the real-time intraday NAVs of all of the selectedSETFs; and e) selling PETF shares intraday at the calculated real-timeNAV of the PETF.
 11. The method of claim 1 wherein the selection of theSETFs in the PETF is made based only on the NAVs of said pre-existingETFs.
 12. The method of claim 11 wherein the selected SETFs are thosewith the highest NAVs.
 13. The method of claim 1 wherein the intradaypurchases and sales of shares of the SETFs are made at intervals asshort as 30 seconds or less.
 14. A non-transitory computer-readablestorage medium for storing a computer program for managing trading ofelectronically traded funds (ETFs) through a single primary exchangetraded fund (PETF), which, when executed by a computer, performs amethod, the method comprising: (a) providing an automatically-managedprimary exchange traded fund (PETF) having a plurality of PETF sharesthat are traded intraday, with the PETF having an intraday net assetvalue (NAV), and consists of shares of a plurality of pre-existing ETFsthat are designated as secondary exchange traded funds (SETF), each SETFhaving a NAV that is determined intraday, and each SETF having aplurality of SETF shares that can be traded intraday; (b) automaticallyselecting, according to preset rules, the SETFs in the PETF based on adefined category of pre-existing ETFs; (c) making intraday purchases andsales of shares of the selected SETFs using a programmed computer; (d)calculating a real-time intraday NAV of the PETF, the calculation madeaccording to a formula based on at least the real-time intraday NAVs ofall of the selected SETFs using the programmed computer; and (e) sellingPETF shares intraday at the calculated real-time NAV of the PETF. 15.The non-transitory computer-readable storage medium as recited in claim14, wherein, the computer program calculates the intraday share price ofthe PETF at the time of intraday trading.
 16. The non-transitorycomputer-readable storage medium as recited in claim 15, wherein theETFs in which the PETF is invested include a predetermined number ofETFs having a highest or lowest NAV.
 17. The non-transitorycomputer-readable storage medium as recited in claim 15, wherein theETFs in which the PETF is invested include a predetermined number ofETFs having a highest or lowest NAV in a predetermined market sector.18. The non-transitory computer-readable storage medium as recited inclaim 15, wherein the ETFs in which the PETF is invested includes apredetermined number of indexed ETFs having a highest or lowest NAV. 19.The non-transitory computer-readable storage medium as recited in claim15, wherein, the ETFs in which the PETF is invested include apredetermined number of closed-end ETFs having a highest or lowest NAV.20. The non-transitory computer-readable storage medium as recited inclaim 15, wherein one or more factors for a selection of ETFs in whichthe PETF is invested are selected from a group consisting of intradayNAV, sector, capitalization, geography, asset quality, whether the ETFis indexed or closed-end, rating, security type, class, equity type,index type, or trading trend.
 21. A non-transitory computer-readablestorage medium for storing a computer program for the managing tradingof electronically traded funds (ETFs) through a single primary exchangetraded fund (PETF), which, when executed by a computer, performs amethod, the method, comprising: (a) providing an automatically-managedprimary exchange traded fund (PETF) having a plurality of PETF sharesthat are traded intraday, with the PETF having an intraday net assetvalue (NAV), and consists of shares of a plurality of pre-existing ETFsthat are designated as secondary exchange traded funds (SETF), each SETFhaving an NAV that is determined intraday, and each SETF having aplurality of SETF shares that can be traded intraday; (b) automaticallyselecting using a programmed computer, according to preset rules, theSETFs in the PETF based on at least the NAVs of pre-existing ETFs; (c)making intraday purchases and sales of shares of the selected SETFsusing the programmed computer; (d) calculating the real-time intradayNAV of the PETF using the programmed computer, the calculation includingbeing made according to a formula based on at least the real-timeintraday NAVs of all of the selected SETFs; and (e) selling PETF sharesintraday at the calculated real-time NAV of the PETF.
 22. Thenon-transitory computer-readable storage medium as recited in claim 21,wherein the other predetermined securities types include at least stocksor bonds.
 23. The non-transitory computer-readable storage medium asrecited in claim 22, wherein, the computer program calculates theintraday share price of the PETF at the time of intraday trading. 24.The non-transitory computer-readable storage medium as recited in claim23, wherein ETFs in which the PETF is invested include a predeterminednumber of ETFs having a highest or lowest NAV.
 25. The non-transitorycomputer-readable storage medium as recited in claim 23, wherein theETFs in which the PETF is invested include a predetermined number ofETFs having a highest or lowest NAV in a predetermined market sector.26. The non-transitory computer-readable storage medium as recited inclaim 23, wherein ETFs in which the PETF is invested include apredetermined number of indexed ETFs having a highest or lowest NAV. 27.The non-transitory computer-readable storage medium as recited in claim23, wherein the ETFs in which the PETF is invested include apredetermined number of closed-end ETFs having a highest or lowest NAV.28. The non-transitory computer-readable storage medium as recited inclaim 23, wherein one or more factors for a selection of ETFs in whichthe PETF is invested are selected from a group consisting of intradayNAV, sector, capitalization, geography, asset quality, whether an ETF isindexed or closed-end, rating, security type, class, equity type, indextype, or trading trend.
 29. A computer programmed with a computerprogram to manage the trading of electronically traded funds (ETFs)through a single primary exchange traded fund (“PETF), when the computerprogram is executed by the computer, performs a method, the methodcomprising: (a) providing an automatically-managed primary exchangetraded fund (PETF) having a plurality of PETF shares that are tradedintraday, With the PETF having an intraday net asset value (NAV), andconsists of shares of a plurality of pre-existing ETFs that aredesignated as secondary exchange traded funds (SETF), each SETF havingan NAV that is determined intraday, and each SETF having a plurality ofSETF shares that can be traded intraday; (b) automatically selectingusing a programmed computer, according to preset rules, the SETFs in thePETF based on at least the NAVs of pre-existing ETFs; (c) makingintraday purchases and sales of shares of the selected SETFs using theprogrammed computer; (d) calculating the real-time intraday NAV of thePETF using the programmed computer, with the calculation including beingmade according to a formula based on at least the real-time intradayNAVs of all of the selected SETFs; and (e) selling PETF shares intradayat the calculated real-time NAV of the PETF.
 30. The computer as recitedin claim 29, wherein, the computer calculates the intraday share priceof the PETF at the time of intraday trading.
 31. The computer as recitedin claim 30, wherein the ETFs include a predetermined number of ETFshaving a highest or lowest NAV.
 32. The computer as recited in claim 30,wherein the ETFs in which the PETF is invested include a predeterminednumber of ETFs having a highest or lowest NAV in a predetermined marketsector.
 33. The computer as recited in claim 30, wherein the type ofETFs in which the PETF is invested include a predetermined number ofindexed ETFs having a highest or lowest NAV.
 34. The computer as recitedin claim 30, wherein, the ETFs in which the PETF is invested include apredetermined number of closed-end ETFs having a highest or lowest NAV.35. The computer as recited in claim 30, wherein one or more factors fora selection of ETFs in which the PETF is invested are selected from agroup consisting of NAV, sector, capitalization, geography, assetquality, whether an ETF is indexed or closed-end, rating, security type,class, equity type, index type, or trading trend.
 36. A system formanaging trading of electronically traded funds (ETFs) through a singleprimary exchange traded fund, the system comprising: (a) a computer; (b)a memory communicatively connected to the computer and storing acomputer program which, when executed by the computer, performs amethod, the method comprising: (1) providing an automatically-managedprimary exchange traded fund (PETF) having a plurality of PETF sharesthat are traded intraday, wherein the PETF has an intraday net assetvalue (NAV), and consists of shares of a plurality of pre-existing ETFsthat are designated as secondary exchange traded funds (SETF), each SETFhaving a NAV that is determined intraday, and each SETF having aplurality of SETF shares that can be traded intraday; (2) automaticallyselecting, according to preset rules, the SETFs in the PETF based on adefined category or pre-existing ETFs; (3) using a programmed computerto make intraday purchases and sales of shares of the selected SETFs;(4) using a programmed computer to calculate a real-time intraday NAV ofthe PETF the calculation made according to a formula that is based onthe real-time intraday NAVs of all of the selected SETFs; and (5)selling PETF shares intraday at the calculated real-time NAV of thePETF.
 37. The method of claim 36, wherein each of said pre-existing ETFshas an intraday NAV and the pre-existing ETFs are ranked based on theirrespective intraday NAVs.
 38. The system of claim 36, wherein saiddefined category of pre-existing ETFs is defined as ETFs having anintraday NAV that is within a top tier of said pre-existing ETFs basedon said ranking.
 39. The system of claim 36, wherein said pre-existingETFs are ranked from highest to lowest intraday NAV and said top tiercomprises the 40 or fewer highest ranked pre-existing ETFs.
 40. Thesystem of claim 36, wherein said pre-existing ETFs are ranked fromhighest to lowest intraday NAV and said top tier comprises the 40 orfewer lowest ranked pre-existing ETFs.
 41. The system of claim 36,wherein said defined category is defined by one or more factors selectedfrom a group consisting of intraday NAV, sector, capitalization,geography, asset quality, whether an ETF is indexed or closed end,rating, security type, class, equity type, index type, and tradingtrend.
 42. The system of claim 36, wherein the selection of the SETFs inthe PETF is made based on the intraday NAVs of said pre-existing ETFs.43. The system of claim 36 wherein shares of the SETFs are purchased andsold at sub-minute intervals.
 44. The system of claim 36 wherein theselection of the SETFs in the PETF takes place intraday.